DFI may acquire businesses from other infra finance institutions
The famous development finance institution to be created by the Center will be allowed to acquire companies from other institutions involved in the financing of infrastructure projects.
The government presented the National Bank for Infrastructure and Development Finance (NABFID) Bill 2021 to Lok Sabha on Monday.
Among the various functions of the institution, the bill specifies that it can “acquire an enterprise comprising the activities, assets and liabilities of any institution, the main object of which is the promotion or development of the financing of ‘infrastructure for projects located in India, or partly in India and partly outside India “.
In addition to loans for infrastructure projects, it will provide loans and advances to any company or statutory company or trust or any financial institution financing infrastructure, with the aim of providing financial assistance for infrastructure projects located in India, or partly in India and partly outside India. .
It will also take over or refinance existing loans made by a lender for infrastructure projects located in India, or partly in India and partly outside India and will transfer for value the loans and advances granted by it, with or without collateral, to trusts.
The development finance institution will also set aside any loans or advances it holds and issue and sell securities on the basis of such loans or advances so set aside in the form of debt securities, certificates of trust. ‘beneficial interest or other instruments, under any name, and will act as trustee for the holders of such securities.
It will borrow money from the central government, listed banks, financial institutions, mutual funds, any class of persons and any other institution or authority or organization notified by the central government, according to the terms and conditions agreed and accepted. short-term loans only for the management of asset-liability mismatches and not for other business purposes.
The government will grant or contribute an amount of Rs 5,000 crore to the institution in the form of cash or negotiable government securities by the end of the first financial year from the establishment of the institution.
According to the bill, the purpose of establishing the institution is to address market failures that arise from the long term, low margin and risky nature of infrastructure finance.
“The institution must be 100% owned by the central government in order to build confidence in its stability and sustainability and to increase resources at competitive rates,” he said.
The government will provide the institution with grants and contributions, guarantees at concessional rates for foreign loans and all other concessions.
Dilution or sale of the stake may be considered once the institution has achieved stability and scale in its business operations, but the government would at any time hold 26 percent of the paid-up voting share capital of the institution.
Disclaimer: The information, facts or opinions expressed in this news article are presented as originating from the IANS and do not reflect the opinions of Moneylife and, therefore, Moneylife is not responsible for them. As the source and provider of information, IANS is responsible for the accuracy, completeness, relevance and validity of any information contained in this article.